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Don't miss these IPOs in 2020

Despite macroeconomic concerns, many companies are preparing to go public. Here are Swissquote Magazine’s picks.

AIRBNB

A star looking to diversify

  • Foundation: 2008
  • Headquarter: SAN FRANCISCO (US)
  • Effectives: 12'400

The long-awaited news was finally announced on 19 September. In a short press release, the home‑rental platform announced its IPO in 2020, with no further details. About time. In the 11 years since it was founded, Airbnb has become a giant, valued at more than $35 billion, and boasts a network of seven million homes available across 100,000 cities and 191 countries. In March, the company proudly announced its 500 millionth renter.

Is this enough to attract investors? After failed IPOs from Uber and Lyft, two other tech unicorns, Airbnb will go public in an uncertain climate. But unlike other tech giants, the San Francisco‑based company has solid revenue. In early 2019, Airbnb, which doesn’t publish any financial results, announced it was profitable for the second year in a row. Furthermore, the Wall Street Journal reported that in 2018, Airbnb’s revenue increased by 40%.

In 2018, Airbnb’s revenue increased by 40%

In recent years, the company has also been trying to diversify its business, particularly through luxury rentals (via its brands Airbnb Plus and Beyond), restaurant reservations and “experiences”, such as cookery classes. In April 2019, Airbnb also acquired hotel reservation network HotelTonight. With this diversification, the company hopes to be less dependent on home rentals, which are becoming increasingly regulated by cities in the form of tourist taxes and shorter permitted rental periods for homeowners.

In February, for example, the city of Paris took Airbnb to court for listing 1,000 unregistered homes on the website, with a potential fine of €12.5 million. In Switzerland, the Vaud State Council also wants to further regulate rental properties. It plans to limit rental periods so that owners can only rent their homes on home‑share sites for 90 days per year and are not allowed to modify their listing to get more days. According to the Valais tourism association (Tourobs), Airbnb offers nearly 50,000 homes in Switzerland. Valais is the region with the most available rentals with a total of 8,484, ahead of Zurich (5,757), Vaud (4,636), Bern (4,457) and Geneva (4,275).

BITMAIN

The bitcoin miner

  • Foundation: 2013
  • Headquarter: BEIJING (CN)
  • Effectives: 3'000

Will it or won’t it? According to Tencent News, the global mining leader Bitmain contacted the US Securities and Exchange Commission in early October, hoping to go public in the near future – although the SEC has yet to confirm this – with Deutsche Bank as a partner. After failing to go public on the Hong Kong exchange in March 2019, the manufacturer of Bitcoin mining machines could be ready to try its luck again.

Why the change of heart? Optimism seems to have returned to the cryptocurrency market. After stagnating at under $4,000 until April 2019, bitcoin has increased in value once again, reaching the symbolic threshold of $10,000 in June. In mid‑November, Bitcoin fell below $9,000, well under its record price of $19,511, reached in December 2017. For Bitmain, whose profitability is linked to the price of cryptocurrencies, this recovery is a windfall that provides a new opportunity for an IPO (see also the September 2018 edition of Swissquote Magazine). Its main competitors – Bitfury and Ebang – are also accelerating their preparations to go public. Chinese company Canaan Creative, the second‑largest firm in the industry, has already gone public, joining the Nasdaq on 21 November.

Optimism seems to have returned to the cryptocurrency market

But Bitmain has to weather a serious governance crisis which could delay its IPO plans. In late October, the Chinese company dismissed Micree Zhan Ketuan, co‑founder and co‑CEO of Bitmain. Will this affect its IPO plans? We’ll find out in 2020.

CASPER

The dream merchant

  • Foundation: 2014
  • Headquarter: NEW YORK (US)
  • Effectives: 4'000

What do actor Leonardo DiCaprio, rapper 50 Cent and basketball player Carmelo Anthony have in common? All three are investors in Casper Sleep. Founded only five years ago, this New York‑based company specialises in selling mattresses online. The concept? Customers order a mattress online with a single click and it is delivered to their door much like Deliveroo: the mattress is rolled up into a box and delivered by bike. Once delivered, customers simply unroll the mattress and wait a few hours for it to return to its normal shape and size. Direct sales with no intermediary make it possible for Casper to offer lower prices than its competitors, and the company quickly became popular with New Yorkers. Only one month after Casper was founded, sales had already reached $1 million.

Customers order a mattress online with a single click

Since then, Casper has expanded to other markets (Canada, the United Kingdom, Germany, Switzerland and France) and generated $400 million in revenue in 2018. It’s a nightmare for traditional brands. In October 2018, the uncontested leading mattress company in the United States, Mattress Firm, went bankrupt. It recovered a month later, but only after a huge sacrifice: the company was forced to close 660 of its 3,000 stores.

According to Bloomberg, Casper will now move to its next development stage. Valued at $1.1 billion, the company is reported to be working with Morgan Stanley and Goldman Sachs in order to prepare for its IPO in 2020. The challenge for Casper is to convince investors that it will not rest on its laurels – because Casper isn’t the only company of its kind on the market. Its easily replicated business model has been copied by Leesa, Purple, Tuft & Needle and Yogabed in the United States, Eve Sleep and Simba in the United Kingdom and Tediber in France.

CLOUDMINDS

The revolutionary robot

  • Foundation: 2015
  • Headquarter: SANTA CLARA (US) AND BEIJING (CN)
  • Effectives: 700

Presented at the Mobile World Congress in Los Angeles this October, the humanoid robot XR‑1, and more specifically the infrastructure that makes it work, impressed visitors. Developed by Chinese company CloudMinds, the XR‑1 is one of the world’s first robots to be controlled by cloud‑hosted artificial intelligence. The data collected by the humanoid’s sensors is immediately sent to a server via a 5G connection. This technology lightens the load for the XR‑1’s inbuilt processor, while also providing unprecedented computing power for a robot.

In time, the infrastructure developed by CloudMinds could simultaneously control hundreds or even thousands of machines. It’s ideal to completely robotise a factory, for example. But the company isn’t stopping at just developing artificial intelligence hosted in the cloud. CloudMinds is working on the entire value chain, from software to physical robots. In April 2019, for example, the company presented smart joints designed for the XR‑1.

The XR‑1 is one of the world’s first robots to be controlled by cloud‑hosted artificial intelligence

To continue its development, CloudMinds filed papers with the SEC in July 2019 for an IPO on the NYSE. The company hopes to raise up to $500 million. For SoftBank, one of the main investors in CloudMinds alongside Foxconn, this IPO is extremely important. The Japanese investment firm was involved with a series of big IPOs that failed in 2019, including WeWork, Uber and Slack. And this is why CloudMinds’s IPO – for which no date has been announced – won’t take place until the time is right.

EAZE

Cannabis delivery

  • Foundation: 2014
  • Headquarter: SAN FRANCISCO (US)
  • Effectives: 135

Rumours about a potential IPO for US start‑up Eaze have been circulating since 2018. This possibility has been very attractive to investors due to the boom in recent years of the cannabis industry. Created in 2014, Eaze is a medical marijuana delivery app. The company expects to generate nearly $1 billion in revenue in 2020.

EHANG

The champion of flying taxis

  • Foundation: 2014
  • Headquarter: GUANGZHOU (CN)
  • Effectives: 300

This Chinese start‑up beat out all the aeronautics giants, including Boeing and Airbus. But what is it? In February 2018, Ehang was the first company in the world to fly an unmanned drone in real conditions, a precursor to future flying taxis with passengers on board.

A video of the device, easily flying through the sky for several minutes, made big waves online

A video of the device, easily flying through the sky for several minutes, made big waves online, especially because it was released at the same time that Vahana, the prototype from Airbus, struggled to stay in the air for more than one minute without anyone on board.

Founded in 2014, the Chinese company has completed more than 2,000 test flights around the world to ensure that its self‑flying vehicle technology is safe for passengers. It hopes to begin the first low‑altitude commercial aerial transport service for people and goods in Guangzhou, China. But to continue development, the company needs cash. In the first half of 2019, Ehang recorded a net loss of $5.5 million, a continuation of the previous year, in which the company made a loss of $10.8 million.

To raise funds, Ehang filed the required documents with the US Securities and Exchange Commission (SEC) in October 2019 in order to go public on the Nasdaq. While the date of the IPO is unknown, the start‑up, which is being supported in its IPO by Morgan Stanley and Credit Suisse, aims to raise $100 million according to the presentation. The funds would allow Ehang to maintain its lead in a booming industry. Many start‑ups are trying to break into the urban mobility market, which is coveted by ride‑hailing services, the auto and aeronautics industries, and delivery companies.  

ENDEAVOR

An agency for the stars

  • Foundation: 2009
  • Headquarter: BEVERLY HILLS (US)
  • Effectives: 6'000

In the entertainment industry, Endeavor is known as a small company that became a global giant in just a few years. This growth earned the Beverly Hills company – which is both a talent agency and event promoter – the reputation for having limitless ambition and being ruthless with competitors. When Endeavor cancelled its IPO on 26 September, just a few hours before the first trades on the New York Stock Exchange, the shock was brutal. In one fell swoop, the emperor of entertainment, owner of various competitions such as Miss Universe and the MMA Ultimate Fighting championship, lost its invincibility.

According to the Wall Street Journal, the main reason for cancelling the IPO was the very disappointing performance of smart exercise bike Peloton’s IPO a few days beforehand.

Investors believe in Endeavor's business model

What do the two companies have in common? They're both unprofitable and investors are increasingly sceptical of companies that cannot turn a profit. In fact, Endeavor felt the momentum change. In the beginning, Wall Street expected that the company would raise $900 million during its IPO. Then, the company revised its offering price downwards twice: on Thursday 26 September, the day of the cancellation, Endeavor only offered a total of 15 million shares in a price bracket of $26 to $27, which would raise “only” $405 million.

Nevertheless, investors continue to believe in Endeavor's business model. They chalked up the company's recent poor results to an unstable IPO market after WeWork's IPO was suspended. In other words, Endeavor didn't give up on Wall Street. It's just pushing back the date. “We're going to continue to evaluate the offer calendar based on evolving market conditions,” confirmed the company in a press release. And according to the experts we consulted, a window of opportunity could open in 2020.

GITLAB

The darling of source code

  • Foundation: 2011
  • Headquarter: SAN FRANCISCO (US)
  • Effectives: 880

Many unicorns are discreet and even secretive when it comes to their possible IPOs. Most don’t say if they plan to go public, and when the transaction begins, they hide the exact date until the very last minute. GitLab is doing just the opposite. The California company has already announced its intentions and is perfectly willing to say it loud and clear: its IPO will take place on 18 November 2020.

GitLab is perfectly willing to say it loud and clear: its IPO will take place on 18 November 2020

The company, which has developed an open‑source software creation platform, has every reason to be thrilled. After Microsoft acquired its main competitor GitHub for $7.5 billion in June 2018, many developers moved to GitLab (see also the May 2019 edition of Swissquote Magazine). According to figures published in the press, the number of projects hosted by the platform increased ten‑fold and its revenue jumped 143% this year. GitLab has some big‑name clients, including Nvidia and Goldman Sachs.

I-MAB

Promising immunotherapy

  • Foundation: 2014
  • Headquarter: SHANGHAI (CN)
  • Effectives: 250

Chinese biopharma company I‑Mab Biopharma filed paperwork with the SEC in October in order to go public on the Nasdaq under the symbol IMAB. The company, which hopes to raise $100 million during its IPO, is now waiting for the right time to go public on Wall Street. It could happen in early 2020 or at the very end of 2019.

Little‑known in Europe, I‑Mab develops innovative drugs to treat cancer

Little‑known in Europe, I‑Mab develops innovative drugs to treat cancer and auto‑immune diseases. The company’s portfolio of drug candidates includes about 10 molecules, including one, TJ202, which is in phase III clinical trials – the last step before going to market – in China. Designed to attack various forms of myelomas (a type of cancer), TJ202 could be available on the Chinese market by 2021 if the clinical trials go well. Over the first half of the year, I‑Mab recorded a loss of $125 million. The company, which has raised $400 million since it was founded, hopes to profit from the gigantic healthcare market in China. According to estimates from consulting firm Frost & Sullivan, the biological medicine industry, which includes I‑Mab, is expected to reach $189.4 billion in 2030.

INSTACART

Grocery delivery

  • Foundation: 2012
  • Headquarter: SAN FRANCISCO (US)

Launched in 2012 in San Francisco, Instacart stands out from other e‑commerce platforms such as Amazon. The company has no warehouses and no stock.

Its employees purchase items in shops chosen by the consumer before delivering them

Its employees purchase items directly in shops chosen by the consumer before delivering them. With this model, Instacart can drastically limit logistical problems and associated costs. Instacart, whose employees shop at 20,000 stores in the United States and Canada, is generating double‑digit growth.

With this level of success, the company was well‑positioned for a possible IPO in 2019. There’s no news yet, but rumour has it that Instacart will go public in 2020, especially since Apoorva Mehta isn’t hiding anything: “An IPO is definitely on the horizon for us,” confirmed the CEO of Instacart on CNN Business.

O2

The operator on the upswing

  • Foundation: 1985
  • Headquarter: SLOUGH (UK)
  • Effectives: 6'700

A part of Spanish group Telefonica, O2 is one of the largest mobile telephony operators in the United Kingdom. The IPO, which will finance the costly deployment of 5G, has been expected since 2018 but was pushed back due to Brexit‑related uncertainty. If London and Brussels are able to agree on terms, O2's IPO could happen in 2020.

PALANTIR

The very secret agent

  • Foundation: 2003
  • Headquarter: PALO ALTO (US)
  • Effectives: 2'500

The subject of many fantasies, US company Palantir is in discussions with two banks – Credit Suisse and Morgan Stanley – aiming for an IPO in 2020, according to the Wall Street Journal. But other sources say that this IPO, which is highly anticipated by investors, won’t happen for several years. Specialising in big data analysis, Palantir was financed from the start by one of its clients – the CIA – via its In‑Q‑Tel fund, which is how the start‑up earned its exciting reputation. But Palantir has other less controversial clients, such as Merck, Fiat Chrysler, Ferrari and Axel Springer.

POSTMATES

The other meal-delivery service

  • Foundation: 2011
  • Headquarter: SAN FRANCISCO (US)

Postmates had planned to go public in October 2019, but after disappointing IPOs from Uber and Lyft, the meal‑delivery company decided to put those plans on hold. Experts now say the California firm will likely go public in Q1 2020. That is, if conditions improve by then. Postmates raised $225 million in September and has raised a total of $906 million since its 2011 launch.

Postmates expects to be profitable by 2021

This latest funding round brings the company’s estimated valuation to $2.4 billion. Postmates makes five million deliveries a month – in many US cities and Mexico City – and generated $400 million in revenue in 2018. The company is not profitable yet, but expects to be by 2021.

Those plans, however, may run into several obstacles which have cooled the markets and led the company to postpone its IPO. First, Postmates faces intense competition on the US food‑delivery market, particularly from applications gravitating around the same market, such as UberEats, Grubhub and DoorDash. Second, the start‑up’s business model, like Uber’s, is based on independent contractors – and that model is being called into question more and more these days.

ROBINHOOD

The kind bandit of finance

  • Foundation: 2013
  • Headquarter: MENLO PARK (US)
  • Effectives: 250

Robinhood, the Californian start‑up where investors can buy and sell shares of companies listed in the United States via an app without broker fees, is slowly but surely headed for an IPO. In 2018, the company hired the former vice president of finance at Amazon, Jason Warnick, to help prepare for this crucial step. Rumours have been flying ever since, and experts predict an IPO as early as 2020.

TOWERCO

The pylon giant

  • Foundation: 2020

UK operator Vodafone announced in July 2019 that it would create a new company to regroup its activities in the pylon and relay antenna sector. The goal was for this company to go public in order to reduce Vodafone's debt. The “ TowerCo”, whose definitive name is still unknown, will be operational in May 2020. It will manage 61,700 pylons, primarily in Germany, Italy, Spain and the UK, for a gross operating revenue of approximately €900 million.

V-ZUG

Swiss household appliances company

  • Foundation: 2020
  • Headquarter: ZUG (SWITZERLAND)
  • Effectives: 2'000

Zug‑based industrial group Metall Zug is currently evaluating whether or not to divest of its household appliance division, which sells the V‑Zug, SIBIR and Gehrig brands. The transaction could come in the form of an IPO of the subsidiary under the name V‑Zug on the SIX Swiss Exchange, by Q2 2020 at the earliest. If this IPO takes place, Metall Zug would still hold a substantial stake in the future independent entity. The household appliance division of Metall Zug generated 593.5 million Swiss francs in revenue in 2018.

 
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